Building profitable customer relationships is a complex business process that requires a multi-disciplinary and holistic approach. Existing methods are based upon either an inside-out approach and/or a single competency, for example Customer Relationship Management (CRM), Business Intelligence (BI) or Customer Value Management (CVM). However, to achieve the goal of profitable customer relationships, it is necessary to (a) know who the customers are (based on BI), (b) how to interact and collaborate with them (based upon CRM), and (c) define customer value using an outside-in approach (based on CVM). Traditional approaches have focused on internal factors, such as increasing employees' productivity so that they can service more customers, or streamlining and optimizing a telephony enablement technology so that a call center can support more inbound customer calls. These approaches have typically ignored the view of the customer.
The electronic market place and e-business made possible by the Internet have increased the need for companies to capture and retain loyal customers. Consumers now have more choices and access to information for making decisions, so that they are in a stronger position to decide with whom and how they want to do business. Furthermore, since consumers can now view competitors with a simple mouse click, the cost of switching loyalties decreases, resulting in a dramatically more competitive environment for capturing and retaining loyal customers. This in turn has led to a need to rethink the traditional CRM processes (based upon call center, sales force automation and marketing campaign management) that are organized around internal employee productivity (usually called the inside-out perspective). Hence, traditional business models for CRM are changing; in particular, the focus has changed from providing customer services (passive, outside-in approach) to one based upon building profitable customer relationships (active, outside-in approach).
CRM has attracted great attention recently because of the new economy companies and the Internet. As the e-business market matures and starts to focus on profitable customer relationships rather than customer service and channel management, it will become increasingly important that companies have an effective business method for building such relationships.